Financial Analysis of Tilapia Cage Fish Farming on Lake Victoria, Uganda: A Case Study of Pearl Aquatics Fish Farm

Abstract

A major constraint to cage fish farming in Uganda is inadequate financial capital- resulting in many farmers abandoning cage fish farming along the production pathway. The Financial Analysis of Tilapia Cage fish farming on Lake Victoria at Pearl Aquatics Fish Farm evaluated the financial viability and the sensitivity of various inputs to the profitability indicators of the tilapia cage aquaculture. Data was obtained through the farm's monthly reports that captured the various input costs, the output value and production information. Secondary data on Fisheries and Aquaculture policies was also analysed for supportive provisions or otherwise for aquaculture development in Uganda. Financial and economic analysis using the Net Present Value (NPV), Internal Rate of Return (IRR), Sensitivity Analysis and Business Analytical Ratios were conducted. Farm installation costs accounted for 84.3%, cage frames (39.4%), nets (29.7%) and duty charges (15.2%) of the fixed cost whereas; feed cost was the largest variable cost at 73.4%. The NPV of US$33,259.31 and an IRR of 10% compared to the discount rate of 7% - indicated financial viability of the enterprise. Business analytical ratios also depicted positive financial viability and sensitivity analysis indicated that selling price and cost of feed had the greatest impact on the NPV. Cage aquaculture operation at Pearl Aquatics Fish Farm, is financially and economically viable and we hereby accept the hypothesis that tilapia cage fish farming on Pearl Aquatics Fish Farm is financially and economically viable to emulate in Uganda. However, Public-Private-Partnership investment in feed production to reduce the cost of feed and the attraction of higher prices for the products, represent plausible opportunities for increasing the profitability of tilapia cage fish farming on Lake Victoria, Uganda.